Top Stamp Duty saving tips for landlords

Posted 01st July 2022 by ctatax-admin

Five Ways Landlords Can Save on Stamp Duty Land Tax

Cornerstone Tax is the UK’s leading property tax advisers, specialising in Stamp Duty Land Tax. We’ve reclaimed over £15 million in overpaid SDLT in the last 12 months. Contact us for tax advice or to see if you are eligible to claim a refund from HMRC on overpaid Stamp Duty

With the new changes being introduced to rental property such as the abolition of ‘no-fault’ section 21 evictions, as well as changes already made which you will have felt with regards to mortgage relief on your tax return, it’s an expensive time to be a landlord.

Whether you’re an old hand wondering if it’s even worth expanding your portfolio or you’re just thinking of starting out as a landlord and worried about the new costs, we have five tips that will help you avoid higher Stamp Duty Land Tax (SDLT) costs and make the system work for you!

1.     Multiple Dwellings Relief

The simplest place to start – if you have the funds available to purchase more than one property at once, you could make significant savings on you Stamp Duty bill. Working to take an average value of the properties purchased and then apply Stamp Duty to that average value, this is particularly helpful when purchasing a number of properties with differing values.

MDR is a well-established relief, though one which is often still missed, and can apply also to properties with more than one dwelling in them, i.e. a self-contained ‘Granny Annexe’. 

2.     Mixed Use

Properties which are not entirely residential in nature may be subject to ‘Mixed Use’ relief, entailing a much lower rate of Stamp Duty being payable. Obvious mixed use scenarios include a flat with a shop underneath or a residential property with commercial or agricultural land attached. But this can also stretch to a property with outbuildings commercially rented to a business, land used for grazing by a local farmer, or even land with easements or restrictive covenants attached.

It’s worth doing your homework on potential purchase properties to see if any factors may apply which work to classify it as mixed use.

3.     Uninhabitable

If you’re on a smaller budget or have time to spare, why not consider getting  true ‘fixer upper’ as your next BTL project? If  property is classified as uninhabitable at the point of purchase then it will be exempt from the 3% additional residential property surcharge on SDLT, which can equate to a massive saving.

Read: How to tell if you’ve overpaid on Stamp Duty Land Tax 

4.     Think Small

Similarly to 3 above, property purchased for less than £40,000 is exempt both from SDLT and the 3% surcharge. Smaller properties in cheaper areas may therefore offer a great introduction to being a landlord, or indeed a cheap and effective way to expand the portfolio of an established one.

5.     Think Mobile

The 3% surcharge is also not applicable to ‘moveable’ property like a caravan or houseboat or mobile home. This gives the opportunity to potentially invest in some holiday let style accommodation which may provide a steady income in the right places – especially as we endure a cost of living crisis in a post-pandemic world where more people may be choosing to holiday closer to home.

Cornerstone Tax is the UK’s leading property tax advisers, specialising in Stamp Duty Land Tax. We’ve reclaimed over £15 million in overpaid SDLT in the last 12 months. Contact us for tax advice or to see if you are eligible to claim a refund from HMRC on overpaid Stamp Duty